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Is it possible to create seizure-exempt shares in SAS-type corporations?

The shares of a company are the way in which the capital of limited partnerships, stock corporations and simplified joint-stock corporations (“SAS”, by its Spanish acronym) is divided, and represent the percentage in which the holder of these shares owns the company. These kinds of companies have the possibility to create various types and series of shares and, specifically for SAS-type companies, the law establishes that the kind of shares may include ordinary, privileged, with preferential dividend and without voting rights, with annual fixed dividend, and payment shares[1]. However, this ability to create different types of shares is not absolute and has certain limits set by law, including in case of SAS, which normally have broad autonomy in the drafting of their by-laws.

Therefore, the Superintendence of Corporations recently specified that the right to create different types of shares does not include the possibility of issuing or creating seizure-exempt shares. In this regard, bear in mind that the seizure-exempt assets are expressly and exhaustively established by law[2], and within these, shares of any kind are not included. In addition to the above, article 414 of the Colombian Commercial Code establishes that all shares, without any exemption, can be seized. Therefore, in the event that a SAS-type company (or any other type of company) establishes in its by-laws the seizure-exempt quality for its shares, this provision will be null and void.

In conclusion, in the event that the seizure of the shares of a company is decreed by the authorities, even if its status as seizure-exempt was established in the company’s by-laws, the legal representative is obliged to make the respective registration of the seizure in the company’s Shareholders Book in accordance with article 416 of the Colombian Commercial Code, since the seizure-exempt provision is understood to be null and void, as mentioned above. In the event that the legal representative does not proceed with this registration, it will be understood as a breach of administrators’ duties and will be liable, jointly and severally, for the damages caused to the company, to shareholders or to third parties.

At BéndiksenLaw we can help and counsel you in the drafting, revision and modification of your company’s by-laws in compliance with the obligations and requirements that the law imposes. Do not hesitate to contact us.

[1] Article 10, Law 1258 of 2008

[2] Article 1677 of the Colombian Civil Code and Article 594 of the Colombian General Code of Procedure

Source: Opinion 220-059925 of March 9th, 2022.